Question 1

Figure 2-3
 
-Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

Accepted Answer

A)   J, K, M, N
B)   K, M, N
C)   K, N
D)   ME) A) and D)
F) None of the above

Question 2

In the circular-flow diagram, in the markets for

Accepted Answer

A)   goods and services, households and firms are both sellers.
B)   goods and services, households are buyers and firms are sellers.
C)   the factors of production, households are buyers and firms are sellers.
D)   the factors of production, households and firms are both buyers.E) B) and C)
F) A) and D)

Question 3

When an economist evaluates a positive statement, he or she is primarily

Accepted Answer

A)   examining evidence.
B)   evaluating values as well as facts.
C)   acting as a policy adviser.
D)   concerned with making a sound decision on how the world ought to be.E) B) and C)
F) A) and D)

Question 4

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?

Accepted Answer

A)   Home experienced increased unemployment.
B)   Home experienced a decline in pear-producing technology.
C)   Home experienced an improvement in cellular phone-making technology.
D)   Home experienced a reduction in resources.E) B) and C)
F) A) and B)

Question 5

Figure 2-4
 
-Refer to Figure 2-4. It is possible for this economy to produce

Accepted Answer

A)   40 notepads and 20 lamps.
B)   50 notepads and 30 lamps.
C)   70 notepads and 40 lamps.
D)   All of the above.E) A) and B)
F) B) and C)

Question 6

Economic models

Accepted Answer

A)   are not useful because they omit many real-world details.
B)   are usually composed of diagrams and equations.
C)   are useful because they do not omit any real-world details.
D)   are usually plastic representations of the economy.E) B) and C)
F) A) and D)

Question 7

Economists hold many positions advising the president and Congress including

Accepted Answer

A)   being a member of the Council of Economic Advisers.
B)   helping to enforce antitrust laws at the Department of Justice.
C)   conducting research at the Congressional Budget Office.
D)   All of these are possible positions that economists hold.E) A) and D)
F) B) and C)

Question 8

In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?

Accepted Answer

A)   The economy experiences economic growth.
B)   There is a technological advance in the toy industry, but the greeting card industry experiences no such advance.
C)   There is a technological advance in the greeting card industry, but the toy industry experiences no such advance.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 9

Which types of models are built with assumptions?

Accepted Answer

A)   economic models, but not models in other disciplines such as physics and biology
B)   economic models as well as models in other disciplines such as physics and biology
C)   models that are built for teaching purposes but not for research purposes
D)   bad modelsE) A) and B)
F) B) and C)

Question 10

Figure 2-4
 
-Refer to Figure 2-4. Efficient production is represented by which point(s) ?

Accepted Answer

A)   Y, Z
B)   W, Y, Z
C)   V, Y, Z
D)   VE) A) and B)
F) A) and D)

Question 11

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)   any misunderstandings in communicating the policy to the public.
B)   whether the policy will affect his standing among different groups in the electorate.
C)   what amendments will be suggested by members of Congress.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 12

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 13

The Economic Report of the President

Accepted Answer

A)   discusses recent developments in the economy and presents analysis of current policy issues.
B)   is written by the Council of Economic Advisers.
C)   is the responsibility of the economists at the Office of Management and Budget.
D)   Both a and b are correct.E) All of the above
F) A) and B)

Question 14

Economists make use of assumptions, some of which are unrealistic, for the purpose of

Accepted Answer

A)   teaching economics to people who have never before studied economics.
B)   advancing their political agendas.
C)   developing models when the scientific method cannot be used.
D)   focusing their thinking.E) A) and D)
F) A) and C)

Question 15

Which of the following is an example of a positive, as opposed to normative, statement?

Accepted Answer

A)   Inflation is more harmful to the economy than unemployment is.
B)   If welfare payments increase, the world will be a better place.
C)   Prices rise when the government prints too much money.
D)   When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.E) A) and B)
F) A) and C)

Question 16

The production possibilities frontier illustrates

Accepted Answer

A)   the trade-off between efficiency and equality.
B)   the combination of output that an economy should produce.
C)   the combination of output that each member of society should consume.
D)   None of the above is correct.E) None of the above
F) B) and D)

Question 17

Figure 2-9
 
-Refer to Figure 2-9, Panel (a) . In order to gain 2 printers by moving from point C to point D, society must sacrifice

Accepted Answer

A)   6 computers.
B)   employment.
C)   efficiency.
D)   More than one of the above is correct.E) A) and D)
F) B) and C)

Question 18

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A)   rotation of the curve.
B)   shift of the curve.
C)   movement along the curve.
D)   change in the slope of the curve.E) A) and C)
F) All of the above

Question 19

In constructing models, economists

Accepted Answer

A)   leave out equations, since equations and models tend to contradict one another.
B)   ignore the long run, since models are useful only for short-run analysis.
C)   sometimes make assumptions that are contrary to features of the real world.
D)   try to include every feature of the economy.E) A) and B)
F) None of the above

Question 20

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Accepted Answer

A)   the nation is producing beyond its capacity, so inflation will occur.
B)   the nation is not using all available resources or is using inferior technology or both.
C)   the nation is producing an efficient combination of goods.
D)   there will be a large opportunity cost if the nation tries to increase production of any good.E) All of the above
F) A) and D)

Exam 2: Thinking Like an Economist

Which of the following is an example of a positive, as opposed to normative, statement?

Correct Answer
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Economists hold many positions advising the president and Congress including

Correct Answer
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In constructing models, economists

Correct Answer
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Economic models

Correct Answer
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Figure 2-3 -Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

Correct Answer
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Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?

Correct Answer
verified

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Correct Answer
verified

Figure 2-4 -Refer to Figure 2-4. Efficient production is represented by which point(s) ?

Correct Answer
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The Economic Report of the President

Correct Answer
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In the circular-flow diagram, in the markets for

Correct Answer
verified

Economists make use of assumptions, some of which are unrealistic, for the purpose of

Correct Answer
verified

The production possibilities frontier illustrates

Correct Answer
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Which types of models are built with assumptions?

Correct Answer
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Figure 2-9 -Refer to Figure 2-9, Panel (a) . In order to gain 2 printers by moving from point C to point D, society must sacrifice

Correct Answer
verified

Correct Answer
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Two variables that have a positive correlation move in the same direction.

Correct Answer
verified

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Correct Answer
verified

When an economist evaluates a positive statement, he or she is primarily

Correct Answer
verified

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Correct Answer
verified

Figure 2-4 -Refer to Figure 2-4. It is possible for this economy to produce

Correct Answer
verified

Exam 2: Thinking Like an Economist

Which of the following is an example of a positive, as opposed to normative, statement?

Correct AnswerverifiedShow Answer

Economists hold many positions advising the president and Congress including

Correct AnswerverifiedShow Answer

In constructing models, economists

Correct AnswerverifiedShow Answer

Economic models

Correct AnswerverifiedShow Answer

Figure 2-3 -Refer to Figure 2-3. This economy has the ability to produce at which point(s) ?

Correct AnswerverifiedShow Answer

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?

Correct AnswerverifiedShow Answer

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. Efficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

The Economic Report of the President

Correct AnswerverifiedShow Answer

In the circular-flow diagram, in the markets for

Correct AnswerverifiedShow Answer

Economists make use of assumptions, some of which are unrealistic, for the purpose of

Correct AnswerverifiedShow Answer

The production possibilities frontier illustrates

Correct AnswerverifiedShow Answer

Which types of models are built with assumptions?

Correct AnswerverifiedShow Answer

Figure 2-9 -Refer to Figure 2-9, Panel (a) . In order to gain 2 printers by moving from point C to point D, society must sacrifice

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Two variables that have a positive correlation move in the same direction.

Correct AnswerverifiedShow Answer

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Correct AnswerverifiedShow Answer

When an economist evaluates a positive statement, he or she is primarily

Correct AnswerverifiedShow Answer

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. It is possible for this economy to produce

Correct AnswerverifiedShow Answer

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